Cryptocurrency Exchange Binance is suffering a huge Bitcoin heist as they lost 7000 BTC, worth around $40 million at the time of this writing. There is speculation that a painful transaction retraction “may” take place in order to desperately recover the huge losses. A retraction of the transaction (AKA Bitcoin Chain Reorg) has not happened in a cryptocurrency as big as Bitcoins, but the Binance CEO, Changpang Zhao himself as denied the possibility of such retraction will be done to save themselves from further trouble.

“(It) Would be very hard to pull off anyway, not for $40m. Most miners will not ‘centralize’ together just for that. But it was suggested by some great minds, we learned, considered, and decided not to pursue further.cons: 1 we may damage credibility of BTC, 2 we may cause a split in both the bitcoin network and community. Both of these damages seems to out-weight $40m revenge. 3 the hackers did demonstrate certain weak points in our design and user confusion, that was not obvious before. After speaking with various parties, including @JeremyRubin, @_prestwich, @bcmakes, @hasufl, @JihanWu and others, we decided NOT to pursue the re-org approach. Considerations being,” explained Zhao in his official Twitter account, @cz_binance.

Top Bitcoin exchanges, along with top miners in the Bitcoin space had a closed-door discussion of the possibility of a reorg. It comes with a huge backlash for all Bitcoin holders, as cryptocurrency is solely based-on trust, and a reorg can destroy the remaining trust of the public towards BTC.

“Binance has shut down withdrawals and only 0.37 BTC left Binance in the past 24 hrs. This gives us reassurance that there are no after effects from the hack, and customer funds are in fact #SAFU. We took a quick look at the @Binance hack, and have identified hacker owned wallets (green) that are holding 5846.32 BTC (~$34M) of the 7000 BTC that was stolen. This #BTC has not moved since the hack,” emphasized @TokenAnalyst.

Bitcoin is the oldest cryptocurrency, at its current rate, an additional block in the chain is added every 10 minutes. A reorganization to reverse the fraudulent transfer is way beyond something that will not affect the entire chain. The Binance CEO accepted that the Bitcoin reputation damage may become much larger than the $40 million lost value. The reorganization will lessen the revenue, making Bitcoin cheap in the process, this will affect BTC holders that bought their coins prior to the reorg. Bitcoin was deliberately created to discourage “collusion” amongst the top BTC holders, as a reorg lessens the value of the cryptocurrency at the expense of reversing a perceived fraudulent act.

“3/ 7250 BTC > 7000 BTC, so at minimum, you need more than 55% of all hashing power to agree to reorg the chain. In 58 more blocks, this rises to 60%, in 116 blocks, 65%. In 174 blocks, 70%, 232 blocks/75%. The cost goes up pretty quickly assuming everyone agrees. And really, if you do this, you end up taking the money from the thieves and giving it to miners. Binance doesn’t benefit that much,” Jimmy Song, Bitcoin Developer.

Related Resources:

Cryptocurrency’s Unsung Heroes- Ethical Hackers

Fixing the Gap in the Cryptocurrency Security

Common Cryptocurrency Problems and How to Prevent Them

How To Defend Yourself From New Cryptocurrency Malware

Post a comment